Indonesia has announced a joint venture with China’s Contemporary Amperex Technology Co Ltd (CATL) to invest $1.2 billion in battery production in the Southeast Asian country, in a bid to further its ambitions to become a global hub for electric vehicles (EVs).

The Chinese cellmaking giant, through its subsidiary CBL International Development, formed the venture with government-owned Indonesia Battery Corporation, Bloomberg reported, quoting a statement from the companies.

The project in Karawang, West Java, aims to scale up battery production to 15 gigawatts a year, the report added.

The move also marks an important step toward Indonesia’s goal to build out a complete supply chain for electric vehicles, a key aim launched by outgoing President Joko Widodo.

The government has looked to leverage its vast production of nickel, a key ingredient for some batteries, to draw in foreign investors to the EV sector.

Earlier this year Hyundai Motor Group and LG Energy Solution Ltd opened the first-ever battery cell plant in the country, while China’s BTR New Material Group launched an anode material plant, the report said.

Chinese automakers such as BYD, Chery, SAIC, GAC Aion, etc and Vietnam domiciled VinFast are setting up facilities in Indonesia, Maybank Research said in a note in August.

The research house said favorable regulations, local brands and penetration of Chinese carmakers will drive electric vehicle (EV) sales higher in ASEAN.

The research house also noted that ASEAN companies that are partnering with Chinese car makers for manufacturing and sales and battery value chain companies, could benefit from the EV rush, backed by battery minerals/ecosystem, a large automotive production base and robust demand.

According to Maybank, ASEAN is witnessing a pick-up in electric car sales, mainly in Malaysia, Indonesia and Vietnam.

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